What is International Tax Law and How Does It Work?

International Tax Laws

International Tax Laws

International tax law is not what you see on the internet or on television. 

What is international tax law?  Well, it is not  the methods used on the Panama Papers  and the Paradise Papers

Many if not most of those folks were hiding assets and illegally avoiding taxes.   

International tax law for small business is unique. 

Small businesses  are fast moving.  Their tax strategy must be able to keep up with the fast pace of today’s business. 

International Tax Law allows legal tax advantages intended by Congress.

We have heard how General Electric pays little U.S. taxes.  Other firms that are in the news are Apple and Google.  All of the firms in the news are owned by the public.  Their tax savings help increase the value of their stock. 

To continue their tax savings, they must keep this wealth created outside the U.S. in foreign countries.  They can do this forever since they are owned by the public and the corporation owner never dies, 

Small business owners use a very different set of international tax laws than publically traded companies.  What you read on the internet does not apply to the privately owned business.

Unlike a publically traded company, the small business tax plan includes the retirement of the owner or the owner’s death.  While legally avoiding taxes allow the small business to grow faster and create more wealth, eventually the owner or his heirs will dissolve the entity. 

The long term tax plan for the small business looks at:
1.  the growth period of the business
2.  the innovation needed to stay competitive (you don’t want to do a “BlockBuster”
3.  withdrawing assets to either the retired owner or his (or her) heirs.

International tax strategies include both international tax laws and a hidden tax law called “common law”.

For example, HP has a fantastic tax division with brilliant international tax CPAs and international tax attorneys.  Yet, one of their international tax plans failed and failed big  (more on this link).  The tax planners ignore the common law of “debt versus equity”.

Get information on the fundamentals of international tax law on this link.

Other international tax plans fail on the “economic substance” common law.  I have more on this law below in an episode of my tax talk podcast.

Fundamentals of International Tax for the Small Business Owner and Investor

international tax, international tax planning,

International Tax Planning for the Entrepreneur is easy to read and understand.

The fundamentals of international tax for the small business owner or the foreign investor seems impossible to understand.

And this is why:  What you read on the web has too much jargon.  Words like PFIC, Subpart F, effectively connected income are explained with more jargon and reference to tax code sections or IRS regulations.   

I wish I could explain the fundamentals in one page blog.   However, this is too many concepts and loopholes to fit into a blog. 

A few years ago, I decided to invest time and money (I hired an editor) to write my book, International Taxation in America for the Entrepreneur.    After many rewrites and giving the book to my business clients to read and criticize, I created an easier to read book.

I know your time is precious.  So, my goal was to write a foreign tax book that you can read in two hours.  Then, I spent more money and hired a professional voice over reader to create an audiobook.

Learn the Fundamentals of International Tax Law with the audiobook

I hired Amazon Createspace to produce the book and audiobook.   You can buy the Kindle version is only $9.50 and add the audiobook.   

Amazon’s a new technology (called whispersync)   reads the book for you with your Kindle version.  Whispersync can read the entire book or you can  activate whispersync when you want to take a break from reading.

Here is a link to the first 23 pages.  Once you buy the book, just send me your email ([email protected])  and I will send you a free PDF version of the 2018 book early next year.

What is great about Amazon is they will give you a complete refund of the Kindle version if you do not like the book.  The Kindle cost $9.50 (here is the link).

I understand that you may be skeptical that an international tax  CPA can write an easy to read offshore tax book.  To be honest, it many years and I did need  professional help.  Explaining foreign taxes and offshore taxes with little jargon is an art form.  My book is the best international tax book for the small business owner and international investor.

Now, if you want to learn more about the book or just have an international tax question, please give me, Brian Dooley, CPA, MBT at call at 949-939-3414.  I never charge for telephone calls.

Meanwhile here is a short video, created by Amazon, about the book.

Here is a blog post that provides insights on the Fundamental international tax small business.

Small Business Tax Planning with Gift Cards and other types of Private Money

Banknotes can be payable in gold, any currency (such as the Swiss Franc) or product. They have been used for centuries by the wealthy to create wealth.

This morning I was annoyed as a Starbucks patron had his iPhone loaded with pre-paid Starbucks.  Small business tax planning with gift cards and other types of private money has been used by Disney for more than half a century.

I was reminded of last century’s use of private money.  For centuries, banknotes have been used in the UK and Europe as “private money.”  

Now,  innovative taxpayers are using their private money to create wealth and to save taxes.  

The Starbuck’s virtual prepaid card and gift cards are types of private money.  With the correct tax election, you do not pay tax when the card is sold. 

You pay tax when the card is used to pay for your product or services.

If you are like Disney, the tax deferral rollover year after year.   About one third of gift cards and prepaid cards are never used giving you an very long tax deferral. 
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International Tax Evasion – IRS Eases Up on Foreign Bank Accounts Reporting Penalty

The words “international tax evasion”  have a fearful tone.  Rightly so, for those that keep hiding but not for those that come forward.  The good news is an easing up on the foreign bank account reporting (FBAR) penalty.

With the help of an international tax accountant, you may owe the IRS less than you were thought. 

The IRS have a new regulation that limits the penalty to $100,000.  The penalty is still one half of the highest foreign bank account balance but with a maximum of $100,000.

The IRS streamlined initiative is the best method if you can qualify.  To qualify you need to give the IRS some type of proof or explanation that you were not willful.  For example, a non-resident parent has your name on an bank account to transfer the account to you when they pass away.

You will want to discuss this with an attorney  that has been either with the IRS or the Department of Justice.

International tax evasion is different than other crimes. 

It does not mean that you were a mobster.  For example, you opened a foreign account owned by you or a foreign company.  You did not report the income earned on the account.  Another example is you have a foreign business or investment property.  You did not report the income.

For this the IRS has the voluntary disclosure initiative.  Under this program, the IRS does not prosecute international tax evasion.  However, besides paying the income tax for the last six to eight years, the IRS charges a penalty.  The amount of the penalty depends on your assets.  The maximum amount of 27.5% of the highest value of all of your foreign assets.

International Tax Planning with the Voluntary Disclosure Initiative.

The 27.5% penalty can never exceed the penalties that you would pay for the failure to file the FBAR and other international tax returns (such as Form 5471).  

As I stated above a new IRS regulation has a cap on the FBAR penalty of $100,000 per year.  And there are more tax savings that only an international tax accountant can help you with (by the way you need both a criminal attorney and a international tax accountant).

For example, here is just one of the many international tax strategies.  The IRS allows you to dissolve all of your foreign corporation without incurring additional tax.  This saves taxes because eventually you or your heirs will want to take the assets out of the foreign corporation.

Dissolving any corporation (domestic or foreign) is a taxable event except under this the IRS program.

Here is another example.  You own foreign investment funds.  Usually, the income tax on these funds is huge (this law is called “passive foreign investment company” with the nickname of ‘PFIC).  Under this IRS program, you are allowed two special tax laws.  You pick the law that is best for you.

One of these laws taxes the PFIC profit at only 20% without the Obama Care 3.8% excise tax on investment income.

Well, this is enough for this blog.  My firm is an international tax CPA firm.  If you would like us to help you and your attorney, then just give me (Brian Dooley,  CPA, MBT) a call at 949-939-3414.

Best International Tax Planning Book on the Planet, By Far

Here are the first few chapter of my easy to read book International Tax Planning in America for the Entrepreneur.   The book is a quick two-hour read with little tax jargon.  You will quickly learn the fundamentals of international taxation planning.  My international tax planning book explains the unique tax savings for the small business,  web based business, tax planning for importers and exporters and the best tax structure for the foreign business coming to the U.S. 

You can get the book on Amazon on this link.  The Kindle is only $9.50  (get the Kindle App for the PC on this link).  The book is also available in paper and audiobook. 

International Taxation in America for the Entrepreneur is the fastest tax answering publication in America. Both the  Kindle and PDF edition have our exclusive quick search function. Just type your topic and find the answer to any international tax planning question.  The audiobook is perfect for those on the road and traveling. 

International Tax Planning Book for the Cross Border Family

Cross Border families have special needs because America’s laws differ from every other country. The multi-national family risks paying taxes in more than one country.  Choosing the correct tax structure before arriving in the U.S. is required. 

A cross-border business has a similar problem.  Multi-national businesses often experience double taxation on one item.  American tax laws are different from the rest of the World.    Thus, you need the best international tax planning book on the Planet.  

Using  “plain English” my book provides solutions to issues regarding cross border taxation.  The examples are easy to understand.  

 For those looking for advance tax planning, the hundreds of footnotes and hyperlinks to court cases and tax planning articles are just a mouse click away.

My international tax planning book is available in audio, Kindle and hard copy.  Need more information.  Then please check out this blog post in offshore e-Commerce international tax planning.